Gujarat High Court
Chandubhai I Patel vs Bank Of India Thru Its Deputy General ... on 29 October, 2020
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
C/SCA/10215/2020 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 10215 of 2020
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CHANDUBHAI I PATEL
Versus
BANK OF INDIA THRU ITS DEPUTY GENERAL MANAGER
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Appearance:
THAKKAR AND PAHWA ADVOCATES(1357) for the Petitioner(s) No. 1
MR KM PARIKH(575) for the Respondent(s) No. 1
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CORAM: HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 29/10/2020
ORAL ORDER
Heard learned advocate Mr. Naveen Pahwa for the petitioner and learned advocate Mr. K.M. Parikh for the respondent through video conference.
Learned Senior Advocate Mr. Navin Pahwa states that similar matter being Special Civil Application No. 6618/2019 is pending for final hearing and this Court (Coram : Hon'ble Mr. Justice Biren Vaishnav) vide order dated 7th October, 2013 has admitted the matter and granted interim relief. The said order reads as under :
"1. Rule, returnable on 21.11.2019. Mr.K.M. Parikh, learned advocate waives service of notice of Rule for the respondent No.1 - Bank.
2. For the following reasons, I am Page 1 of 5 Downloaded on : Sat Feb 27 01:24:24 IST 2021 C/SCA/10215/2020 ORDER inclined to grant interim relief.
3. In this petition, under Article 226 of the Constitution of India, the petitioners have challenged the action of declaring the petitioners as "Willful Defaulters."
4. Primary contention is raised by learned Senior Counsel Mr.Navin Pahwa appearing for the petitioners assisted by Mr.Bhargav Hemmig, learned advocate that the petitioners are promoters / share holders who had initially promoted the company. He has invited my attention to the RBI guidelines to contend that their position as the Directors of the Company would be different as mere promoters / share holders, he would not be infact incharge and responsible for the management of the affairs of the business enterprise. He has therefore drawn my attention in this context to Clause 2.1.2 of the RBI Circular dated 1.7.2015. He has further invited my attention to the show cause notice dated 27.6.2018 (Page No.9A) wherein the petitioners have also been roped in as "Willful Defaulters" and in paragraph No.6 of the notice, it is a specific case of the Committee which identifies such "Willful Defaulters" that appropriate steps are being undertaken to declare the petitioners as "Willful Defaulters."
5. It is a specific assertion in the petition that the order of the Identification Committee for any such order, prior to the stage of the Review Committee, has not been served on the petitioners.
6.Learned Senior Counsel Mr.Navin Pahwa appearing for the petitioners has invited Page 2 of 5 Downloaded on : Sat Feb 27 01:24:24 IST 2021 C/SCA/10215/2020 ORDER my attention to Clause (b) of Paragraph No.3 of the circular and contended that after considering the submissions, pursuant to a show cause notice, the Committee would issue an order recording the fact of Willful Defaulters and reasons for the same. The circular further reads that an opportunity should be given to the borrower and the promoter / whole time director for a personal hearing if the committee feels such an opportunity is necessary.
7. Mr.K.M. Parikh, learned advocate for the respondent No.1 - Bank would contend that the petitioners are promoters / whole time directors, inasmuch as, the finance for the initial promotion was at the hands of the petitioners. He further contended that there is no mechanism for giving a hearing and it is only after the decision of the Review Committee and considering the submissions for which they were invited on 27.6.2018, that the impugned order dated 21.2.2019 has been passed.
8. Prima facie, it appears that the present petitioners' names have been shown in the website of CIBIL as "Willful Defaulters." Though, it may at first blush, appear to be correct to say that after the Identification Committee takes into consideration the response to the show cause notice, the petitioners may not be heard.
8.1 Taking into consideration that it is the specific case of the
petitioners that they merely promoted the company and share holders at initial stage and work in no manner was concerned with the management thereof and Page 3 of 5 Downloaded on : Sat Feb 27 01:24:24 IST 2021 C/SCA/10215/2020 ORDER particularly when the Identification Committee, without considering their role issued a notice on 27.6.2018 opining that they were "Willful Defaulters", an opportunity of personal hearing before the Review Committee stage was necessary.
9. Nothing has come on record to substantiate such a stand that such notice is not necessary, though Mr.Parikh, learned advocate for the respondent - Bank would contend that in fact it is not a stage that the petitioner be heard.
10. Mr.Parikh, learned advocate has further contended that order of the Identification Committee need not be served. That submission in view of the specific provision of reasons being recorded by virtue of Clause (b) in the mechanism, once the reasons have been assigned by an order under Clause (b) and when the committee feels that it should be necessary to give an opportunity of hearing that the order need not be supplied is not accepted.
11. Prima facie reading of Clause (b) of Paragraph No.3 of the Mechanism would suggest that inbuilt mechanism of hearing be given to the petitioners and the promoter / whole time director and when the Committee feels it necessary so, as in the facts of the case before this Court in which the petitioners ought to have been given an opportunity of personal hearing, in absence of such hearing, I deem it fit to grant interim relief in terms of paragraph No.9(B) till then. Order accordingly."
In view of the above order, issue rule Page 4 of 5 Downloaded on : Sat Feb 27 01:24:24 IST 2021 C/SCA/10215/2020 ORDER returnable on 24th November, 2020. Learned advocate Mr. Parikh waives service of notice of rule on behalf of the respondentbank.
Interim relief in terms of paragraph no. 9(B) till the final disposal of this petition.
Let both the matters be listed together for final hearing on 24th November, 2020. To be listed on top of the Board.
(BHARGAV D. KARIA, J) RAGHUNATH R NAIR Page 5 of 5 Downloaded on : Sat Feb 27 01:24:24 IST 2021